Murray Rothbard on American Economic History

I am rather slow to find out all that is bot good and available on the internet. Case in point is my finding just last night that an entire course of lectures by Murray Rothbard on American Economic History from the Civil War through World War II. The course is entitled "The American Economy and the End of Laissez-Faire: 1879-World War II" and was taught by Rothbard while he held a position at Brooklyn Polytechnic in 1986. All of them have been made available by the Ludwig von Mises Institute and are free for the listening.

The first lecture is called "The Civil War and Its Legacy" and is presented here with much gratitude.

Bruce Bartlett, Keynesian?

It appears that Bruce Bartlett has finished turning his academic truck around and finally learned to stop worrying and learn to love Keynesian economics, at least as it relates to tax policy. Three days ago he wrote in a blog post at the New York Times Economix (HT: Tom Woods). that higher tax rates on the rich will increase government revenue. Responding to a Wall Street Journal op-ed written by Alan Meltzer, Bartlett writes, "If the rich are going to continue to get richer in low-tax countries and high-tax countries alike, then it must mean that high tax rates have far less of a disincentive effect on the rich than conservatives like Professor Meltzer continually proclaim."


Later in the piece he specifically goes after supply-side economists, who have been claiming since the Reagan administration that if we raise taxes too high, tax revenues will actually fall, because the incentive to be productive will diminish to the extent that the tax base falls.

A common reason given by conservatives for why tax rates must not be increased is that the government won’t get much, if any, additional revenue and might even get less due to the Laffer curve. If tax rates are too high, they say, the rich will stop working and investing in job-creating businesses and instead spend all their time vacationing and seeking out tax shelters. Therefore, revenues will fall.

However, one never sees conservatives cite any empirical evidence in support of their contention. It is simply asserted as self-evident that the rich will go on strike, as they did in Ayn Rand’s famous novel, “Atlas Shrugged,” even though the nation clearly did quite well during times when the top income tax rate was far higher than it is now.

Bartlet should know what he is talking about. He once traveled in Austrian circles and then himself became enamored with supply-side economics. More recently, he became famous for his criticisms of George W. Bush. Of course, there is plenty for which to criticize Bush. In his last term alone, he increased total federal government spending by over 48%!

Nevertheless, now Bartlett has moved past being a Bush critic to what seems to be approaching a full fledged Keynesian economist by arguing that increased taxes does not cause a drag on the economy because "the nation clearly did quite well during times when the top income tax rate was far higher than it is now."

The economic history he cites, however, is not an argument for higher taxes. It is merely evidence that there are more things that affect relative prosperity than taxes. More important than taxes is government spending. The problem is that we spend so much and it has to funded somehow. Sometimes its funded through taxes, sometimes through debt, and sometimes inflation. All of these funding sources create negative economic consequences. Additionally, government spending directs scarce economic goods away from their most highly valued uses, hampers the market division of labor, and, hence, reduces social productivity, leaving us relatively impoverished.

Bartlett's position on taxation is a stark change from what he wrote in, "Keynesian Policy and Development Economics," a chapter in the book Dissent on Keynes, published back in 1992. Criticizing the Keynesian perspective on taxation, he says,

In the Keynesian model, taxes affect the economy only through their impact on aggregate demand. Thus, all that matters is the aggregate amount of tax revenue relative to spending; it does not really matter what the marginal tax rates are or what the structure of taxation is, except to the extent that progressive tax rates are preferred to regressive ones because those with higher incomes might be inclined to save some of their income, thus depressing aggregate spending.

I am relieved to see that he does not seem to be calling for "the United States go back to the top rate of 50 percent that prevailed during most of Ronald Reagan’s administration, let alone the 91 percent rate of Dwight Eisenhower’s." However, focusing on the lack of government revenue is concentrating on the wrong side of the fiscal coin. The best thing Bartlett could do is to remind his readers of the New York Times that the real economic culprit is not excessively low taxes on the wealthy, but excessively high government spending.

Organizing Entrepreneurial Judgment

A brand new book developing the theories of entrepreneurship and the firm, Organizing Entrepreneurial Judgment: A New Approach to the Firm, sounds like on of the most promising books on these topics in quite some time. You can watch the book's authors, Nicolai Foss and Peter Klein discuss the contents of the book in this video recorded a few days ago at the Austrian Scholars Conference.

Below is a description of the book from the publisher:

Entrepreneurship, long neglected by economists and management scholars, has made a dramatic comeback in the last two decades, not only among academic economists and management scholars, but also among policymakers, educators and practitioners. Likewise, the economic theory of the firm, building on Ronald Coase’s (1937) seminal analysis, has become an increasingly important field in economics and management. Despite this resurgence, there is still little connection between the entrepreneurship literature and the literature on the firm, both in academia and in management practice. This book fills this gap by proposing and developing an entrepreneurial theory of the firm that focuses on the connections between entrepreneurship and management. Drawing on insights from Austrian economics, it describes entrepreneurship as judgmental decision made under uncertainty, showing how judgment is the driving force of the market economy and the key to understanding firm performance and organization.

The Pure Time-Preference Theory of Interest

At the Authors Forum at this year's Austrian Scholars Conference Jeffrey M. Herbener discussed the book he edited featuring a collection of articles defending the pure time-preference theory of interest developed by Ludwig von Mises. In his introductory essay and in his remarks, Herbener explains the neglected important contribution of Frank Fetter. You can watch Herbener's presentation below:

MAN, ECONOMY, AND STATE turns 50!

This year marks the 50th anniversary of the publication of Murray Rothbard's Man, Economy, and State. Long considered Rothbard's Magnum Opus, it is a tremendous achievement and still deserves to be read by everyone who is interested in economic theory and policy.

The final event of this year's Austrian Scholars Conference will be a roundtable panel session today on the semicentennial of the book. I am honored to participate, along with Peter Klein, Joseph Salerno, David Gordon, Guido Hulsmann, and Jeffrey Herbener.

Some of my remarks will be based on part of an article I wrote a number of years ago, "Samuelson and Rothbard: Two Texts and Two Legacies," in which I compare Paul Samuelson's Economics: An Introductory Analysis with Man, Economy, and State. My brief prepared remarks will be discussing why Man, Economy, and State works so well for teaching principles of economics. Its main virtues along these lines is that Rothbard is a very engaging and clear writer and his building up an edifice of economic truth from the premise of human action. As such, readers of Rothbard learn a body of economic laws that they can take to the bank (and a 100% reserve bank at that!). The bulk of my text is based on the pedagogy of Rothbard's great achievement. Man, Economy, and State is deserving of this conference session drawing attention to its many contributions because economic truth never grows old.

Word has it that the session will be streamed live today at 5:30pm Eastern, 4:30pm Central. You can watch it here:

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Austrian Scholars Conference 2012

The Austrian Scholars Conference begins today! The kick-off is what I expect to be an excellent authors forum, including my department chair, Jeffrey Herbener, talking about the new book he has edited, The Pure Time Preference Theory of Interest. I will contribute to a panel discussion Murray Rothbard's Man, Economy, and State in light of the 50th anniversary of its publication. You can look at the conference schedule here. If you cannot attend the conference, you can at least watch the memorial lectures streamed live by clicking here.

Inflation Strikes Back!

Economic Policy Journal is reporting that there is serious evidence of developing price inflation. This squares with whay my department chair, Jeffrey Herbener told a group of students a Freedom Readers lecture last November. Freedom Readers is a lecture series sponsored by the Grove City College Center for Vision and Values. You can watch his lecture, "Inflation Strikes Back" by clicking here.